Wednesday, June 25, 2008

Domino Theory for Supermarket?

According to the Observer, the city's Landmarks Commission has given the green light for the redevelopment of the old Domino Sugar plant in Brooklyn: "Unlike the former, more controversial plan, this one preserves the iconic Domino Sugar sign, better hides the mechanicals, and adds fewer floors on top of the landmarked old factory. The New Domino is a mixed-use development, slated to have 2,200 residential units, 30 percent of which are supposed to be affordable, along with approximately 220,000 square feet of new retail, commercial and community cultural facility space."

What this means is that there will be a great opportunity to put a nice new modern supermarket in the Domino site-but this possibility isn't without obstacles, the largest of which may relate to cost. This new project will not only be expensive to build, but will also include a good percentage of affordable apartments that will need substantial subsidies. In this kind of situation, developers generally look to recoup from the commercial tenants.

As a result, if a supermarket tenant is found for the development, it may not be able to offer groceries to the local community at a price structure it can afford-that is if a market even bites on the lease costs for the site. Which means that the city's challenge will be to act as an intermediary to insure that a new affordable market can be part of the Domino deal.

Which it can do because the entire deal needs to have city council approval. As the NY Daily News points out: "The developer also plans to add up to four additional stories to the refinery, to the tune of more than $40 million. The City Council must still approve the plans, which include an 11-acre revamping of the Williamsburg waterfront, boasting 2,200 housing units, shops and parks. He said he hopes to start building by fall next year with the New Domino as his architectural centerpiece. "The ritzy apartment building will pay" for the rest, Lappin said."

Along with the retail component, unless the city intervenes. We believe that this will present a real challenge to the city's expressed desire to get more supermarkets into underserved neighborhoods, and should be a galvanizing force for labor, community and food advocates who have made the supermarket disappearance issue so compelling.